“NZ export prices are dramatically higher than would normally be the case given the levels of international food and non-food agricultural commodity prices. Booming dairy export prices is part of the story and this is linked to rapid growth in the last few years in Chinese consumption of dairy products. Analysis of NZ export data reveals that surging Chinese demand is also driving export prices for meat, wood, fish and, to a lesser extent, fruit. Economic development and liberalisation in China have finally unleashed Chinese consumers on the world stage, at least for many of NZ’s primary exports.

The same is true for tourism, where a dramatic increase in Chinese visitor arrivals since 2011 has been almost the sole source of upside in visitor numbers. The period of economic development in Japan in the 1970s and 1980s sheds some light on what will happen with Chinese visitor arrivals in the coming decade or more. Economic development drives strong income growth that enables consumers to afford “affluent” foods and overseas holidays, but there will also be an inter-generational effect. Older generations with low propensities to eat Western foods and holiday overseas will be replaced by younger generations with much higher propensities. This inter-generational process will play out over the next decade or more. There will be temporary setbacks along the way, but for many commodity exports and for tourism China should remain the primary driver of growth for a long time. And with China about to further liberalise capital flows it probably means Chinese buyers will play a larger part in other NZ markets in the future, including the property market.”